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I remember buying my very first condo. I’d researched everything, had an inspector check the unit and did a really good job getting the best financing possible on a conventional loan. I knew enough to have a 20% down payment to avoid paying Private Mortgage Insurance and score a lower rate. That was back in 1983 when interest rates on a thirty year fixed mortgage were running around 13%. I took a chance and went for a variable loan that re-priced every six months and had the lowest spread to the underlying index. But it came with no ceiling rate which meant if the underlying index went to 25% - I’d have to go along for the ride. That was a huge risk back then, and even though I was certain that rates were going down, I can’t say it didn’t keep me up nights. And while I was busy figuring out every possible angle, I almost sent my agent to an insane asylum. By the time I put in an offer, we must have looked at fifty properties - twice. I thought I had everything covered. But there was one thing that I didn't get quite right - the homeowners' dues.
One of the things I was looking for was low monthly dues. This particular condo came with a $49 monthly payment to the Homeowners association that covered garbage, water, sewer and taxes plus insurance on the building. Aside for my mortgage payment and the real estate tax, the only other monthly expense I had was the $49 check I wrote to the homeowners’ association.
The reason the dues were so cheap was because the 12 unit building had ‘work parties.’ We’d all pitch in with the maintenance and help take care of the lawn. The building was self managed and, all in all, I have to say I spent fifteen of the best years of my life there. Because we all were so cooperative, we ended up creating an environment that was akin to a little urban village.
The complex was made up of twelve charming Anhalt designed townhomes built around a garden courtyard and it turned out to be a mini village of cheapsters - my kind of people. The bad news was that they were so tight fisted that they tended to neglect or defer some of the big stuff - like the roof and the plumbing. The low dues also meant the association didn’t have much in the way of reserves. So, when something big had to be done - the way they financed it was by levying assessments. And sure enough, the second month I moved in, I was invited to my very first meeting and they decided to re-plumb the entire complex with copper pipes. Not only that - the cost of patching up any damages to the bathroom or the kitchen had to be paid for by the owners of each unit - which meant a mandatory tiling job around the tub and the kitchen sink.
My point is that not all home owners’ dues are created equal. If you’re just shopping for the lowest dues, you might end up getting what you paid for.